Irvine-based Novocell Inc., one of Orange County’s few stem cell startups, has landed $20 million in venture funding and hired a chief executive.
Johnson & Johnson Development Corp., Johnson & Johnson’s venture arm, led the funding, one of the larger venture financings in the county this year.
The round is Novocell’s second. The company, started in 1999, has raised $40 million in all.
Novocell is looking to offer diabetics an alternative to lifelong insulin shots.
J & J; “sees the concept of diabetes cell therapy as being potentially a very important opportunity,” said Alan Lewis, Novocell’s chief executive.
Earlier this month, Novocell announced the hiring of Lewis to fill a spot that had been vacant since late 2005, when Paul Latta left.
Before coming to Novocell, Lewis ran the Signal Pharmaceuticals division of New Jersey’s Celgene Corp. His background also includes serving as vice president of research at what’s now drug maker Wyeth.
Lewis said he’s getting ready for a road show to drum up a third round of financing.
“This is an expensive business,” said Lewis, a native of Wales who lives, appropriately, in Cardiff by the Sea in northern San Diego County.
Novocell is using the money to develop its lead product,”islet cells” from embryonic stem cells.
The company is looking to coat islet cells and insert them into a diabetic patient’s pancreas. The hope is the cells will boost insulin production, cutting down on the need for shots and blood sugar monitoring.
Diabetics often lose islet cells after their immune systems attack them.
There are other companies that are working on stem cell-related islet development, including Geron Corp., a publicly traded rival from Menlo Park.
Novocell is looking to stand out by coating cells with a material that stops a patient’s immune system from attacking them.
“We’re kind of an interesting blend between a pure stem-cell play and delivery technologies,” Lewis said.
Novocell is several years from having a product for sale.
The company is aiming to get the islet cells into clinical trials in 2009 and is looking to get Food and Drug Administration approval around 2012, Lewis said.
Novocell might consider a public offering or a buyout from J & J; or another suitor as it gets closer to commercialization, Lewis said.
“Novocell is pragmatic,” he said. “We recognize that Johnson & Johnson would be an outstanding partner.”
Novocell has some 60 workers at three facilities. Besides its Irvine office, the company has a laboratory in San Diego, where the cell research work is done, and a smaller lab on the University of Georgia campus in Athens.
Stem Cell Issue
The company uses stem cells from embryos, something Lewis acknowledged has caused “a big debate” because of political and ethical concerns.
He said he’s hopeful patients and politicians will see the benefits of using stem cells, and that people “will accept what we do is for the long-term good of the patient.”
Only embryonic cells can be converted into islet cells, according to Lewis.
“It’s extremely difficult, if not impossible, to use adult cells to do that,” he said.
Novocell is looking beyond diabetes. It’s planning to license out its stem cells to a biopharmaceutical company that’s developing cancer drugs, Lewis said.
A partnership like that, he said, would give Novocell milestone and royalty payments to provide another source of income besides venture funding, he said.
The company is one of just a handful of stem cell businesses in OC.
Others include PrimeGen Biotech LLC, an Irvine company that is using adult stem cells to regenerate several parts of the body, such as heart tissue and pancreatic islet cells. Tom Yuen, cofounder of defunct computer maker AST Research and chairman and chief executive of SRS Labs Inc. in Santa Ana, is chief executive. Yuen is a dialysis patient himself.
Another is Irvine’s California Stem Cell Inc.
